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Portugal Has the Fastest Rising Prices in Europe (But It Is Still Relatively Inexpensive)

7 August 2018

The German Statistical Portal ranked the prices of 120-m2 flats in major cities throughout the European Union. Portugal is not one of the more expensive ones.

Housing prices are at ever higher levels, and not just in Portugal. In addition to Lisbon and Porto, which saw prices skyrocket by 20% over the last year, other countries in the European Union also saw increases, according to the German portal Statista. Last year, the residential sector showed “clear signs of recovery,” with the largest increases seen in Portugal, Ireland, the Netherlands and Sweden. Despite the boom, prices per square meter in Portugal are still far below those in countries such as the United Kingdom and France.

“The residential real estate market has recently shown clear signs of recovery, with rising house prices as a significant trend,” the statistical portal reported. Last year, residential real estate prices rose strongly in Portugal (12.5%), Ireland (11.8%), the Netherlands (8.2%) and Sweden (8%), a sign of that the “European economy is improving in tandem with investor confidence.”

Here, the rise in property prices is the focus of numerous reports in Portuguese newspapers, and as demand increases, supply is becoming ever tighter. However, although housing prices in Portugal are already close to those in some other European capitals, the truth is that there still is a long way to go before it catches up with some of the more expensive Member States, the Statist reported. Portugal continues to be in the middle of the ranking of the most expensive cities in the EU.

According to the study carried out by the German website – which analysed information from each of the 27 Member States (though Statista has no data for Ireland), comparing real estate prices in each of these countries – buying a 120-m2 flat in Portugal (Lisbon) would cost 3,830 euros per square meter, a figure that places the country in the middle of the ranking (in 14th place) and slightly below average for the 27 countries in the region (4,950 euros).

Cost of a 120-m2 Flat in the 27 Member States

It should be noted that this figure does not correspond to data collected by the National Statistical Institute (INE), which discloses the median, rather than the average, price per square meter of properties sold throughout the country. According to the INE, the median price per square meter in the municipality of Lisbon stood at 2,581 euros at the end of the first quarter of this year. Considering just three-bedroom houses, to attempt to replicate the price of 120 square meter homes, the median price reached 2.521 euros. However, average prices easily exceed the median price.

In any case, buying a similar-sized property is significantly more expensive in the UK (€20,190/m2), France (€12,796) and Austria (€11,559), the three countries with the highest prices. In turn, the lowest prices can be found in Romania (1,591 euros), Cyprus (1,536 euros) and Bulgaria (1,300 euros).

Thus, although real estate in Portugal is almost as expensive as in Germany or Spain, for example, it is still quite inexpensive compared to other European cities. Prices would need to increase by 16,360 euros per square meter to exceed those in London, 8,966 euros to grow higher than those in Paris and 7,729 euros to edge out Vienna. It should also be noted, however, that incomes are also significantly higher in those countries.

According to the German study, “eight years after the financial crisis, most European property markets have regained momentum, with some member states recovering and others falling behind.” Between 2014 and 2015, for example, Portugal and Romania were among the countries with the highest increases in housing prices, while Slovenia and Italy saw the smallest increases.

Original Story: Economia Online – Rita Neto

Translation: Richard Turner